Lofaro & Headley, LLC


What people qualify for Chapter 7 bankruptcy?

On Behalf of | Feb 19, 2021 | Bankruptcy

Because they offer a path toward debt forgiveness, Chapter 7 bankruptcy filings can appeal to many people struggling with the burden of debt. However, in order to qualify for this specific bankruptcy filing, you must pass a test known as the means test. What is the means test, and do you qualify?

What is your income?

Chapter 7 bankruptcies are only available to people with a lower income. Because of this, the first step in means testing is to compare your income over the past six months to the median income in your state. If your income is less than your state’s median income, you automatically qualify for Chapter 7 bankruptcy.

What if your income is too high to qualify?

If you have a higher income, you may think that Chapter 7 bankruptcy is unavailable to you, but this is not necessarily the case. You may still qualify if your household has a high number of “allowable expenses” every month. These deductions can include:

  • Food expenses
  • The cost of shelter for your family
  • The cost of medical care
  • Expenses for transportation
  • Childcare
  • Education
  • Taxes and other payroll deductions

Applicants can document these expenses and deduct them from their income, allowing households with a high number of dependents or high healthcare costs to qualify.

If you want to explore whether Chapter 7 bankruptcy or other bankruptcy filings will offer you a meaningful path to debt relief, consider speaking to an attorney. They can guide you through the process of means testing and explore other options if necessary.